Income Tax Appellate Tribunal - Delhi
Vaibhav Jain, Delhi vs Acit, New Delhi on 12 April, 2018
Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014
A Y 2006-07 to 2011-12
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "D": NEW DELHI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 3770 to 3775/Del/2014
(Assessment Year: 2006-07 to 2011-12)
Vaibhav Jain, Vs. ACIT,
Pocket-B-3, 103/104, Sector- Central Circle-10,
11, Rohini, Delhi New Delhi
PAN: ACXPJ8957C
(Appellant) (Respondent)
Assessee by : None
Revenue by: Shri Vijay Varma, CIT DR
Date of Hearing 09/04/2018
Date of pronouncement 12/04/2018
ORDER
PER BENCH
1. These are the appeals filed by the assessee against the order of the ld CIT(A)-XXXII, New Delhi dated 26.03.2014 for the Assessment Year 2006-07 to 2011-12 involving the issue of taxation of an accommodation entry provider who according to his version provided bogus bills of Rs 980 Crores over a period of these six years.
2. The assessee has raised the following grounds of appeal in ITA No. 3770/Del/2014 for the Assessment Year 2006-07:-
"1. That the order passed by the ld CIT(A)-XXXII is bad in law and on facts.
2. That the ld CIT(A) has grossly earned in confirming the addition of Rs. 58492077/- because.
i. Ld CIT(A) has wrongly held appellate failed to furnish any documentary evidence to show that infra transactions between the firms were not business transactions through which accommodation entries were provided.
ii. Ld CIT(A) has wrongly confirmed that appellant has failed to file evidence that VAT charged @4% from the beneficiaries on accommodation bills were actually refunded to the beneficiaries or deposited with the trade tax department.
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Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014
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iii. Ld CIT(A) fell in error in confirming the upscaling the rate of
commission artificially from 1.5% to 2%.
iv. Ld CIT(A) omitted too consider that actual rate of
commission, based upon seized documents, workout to
1.26% and after reducing the expenses, it works out to
0.76%.
3. That the ld CIT(A) in confirming addition of Rs. 100000/- on account of unexplained investment."
3. The assessee has raised the following grounds of appeal in ITA No. 3771/Del/2014 for the Assessment Year 2007-08:-
"1. That the order passed by the ld CIT(A)-XXXII is bad in law and on facts.
2. That the ld CIT(A) has grossly earned in confirming the addition of Rs. 186766002/- because.
i. Ld CIT(A) has wrongly held appellate failed to furnish any documentary evidence to show that infra transactions between the firms were not business transactions through which accommodation entries were provided.
ii. Ld CIT(A) has wrongly confirmed that appellant has failed to file evidence that VAT charged @4% from the beneficiaries on accommodation bills were actually refunded to the beneficiaries or deposited with the trade tax department. iii. Ld CIT(A) fell in error in confirming the upscaling the rate of commission artificially from 1.5% to 2%.
iv. Ld CIT(A) omitted too consider that actual rate of commission, based upon seized documents, workout to 1.26% and after reducing the expenses, it works out to 0.76%.
3. That the ld CIT(A) in confirming addition of Rs. 10895000/- on account of unexplained investment."
4. The assessee has raised the following grounds of appeal in ITA No. 3772/Del/2014 for the Assessment Year 2008-09:-
"1. That the order passed by the ld CIT(A)-XXXII is bad in law and on facts.
2. That the ld CIT(A) has grossly earned in confirming the addition of Rs. 136924494/- because.
i. Ld CIT(A) has wrongly held appellate failed to furnish any documentary evidence to show that infra transactions between the firms were not business transactions through which accommodation entries were provided.
ii. Ld CIT(A) has wrongly confirmed that appellant has failed to file evidence that VAT charged @4% from the beneficiaries
2|Page Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 on accommodation bills were actually refunded to the beneficiaries or deposited with the trade tax department. iii. Ld CIT(A) fell in error in confirming the upscaling the rate of commission artificially from 1.5% to 2%.
iv. Ld CIT(A) omitted too consider that actual rate of commission, based upon seized documents, workout to 1.26% and after reducing the expenses, it works out to 0.76%.
3. That the ld CIT(A) in confirming addition of Rs. 3367000/- on account of unexplained investment."
5. The assessee has raised the following grounds of appeal in ITA No. 3773/Del/2014 for the Assessment Year 2009-10:-
"1. That the order passed by the ld CIT(A)-XXXII is bad in law and on facts.
2. That the ld CIT(A) has grossly earned in confirming the addition of Rs. 74027392/- because.
i. Ld CIT(A) has wrongly held appellate failed to furnish any documentary evidence to show that infra transactions between the firms were not business transactions through which accommodation entries were provided.
ii. Ld CIT(A) has wrongly confirmed that appellant has failed to file evidence that VAT charged @4% from the beneficiaries on accommodation bills were actually refunded to the beneficiaries or deposited with the trade tax department. iii. Ld CIT(A) fell in error in confirming the upscaling the rate of commission artificially from 1.5% to 2%.
iv. Ld CIT(A) omitted too consider that actual rate of commission, based upon seized documents, workout to 1.26% and after reducing the expenses, it works out to 0.76%.
3. That the ld CIT(A) in confirming addition of Rs. 7300200/- on account of unexplained investment."
6. The assessee has raised the following grounds of appeal in ITA No. 3774/Del/2014 for the Assessment Year 2010-11:-
"1. That the order passed by the ld CIT(A)-XXXII is bad in law and on facts.
2. That the ld CIT(A) has grossly earned in confirming the addition of Rs. 45280273/- because.
i. Ld CIT(A) has wrongly held appellate failed to furnish any documentary evidence to show that infra transactions between the firms were not business transactions through which accommodation entries were provided.
ii. Ld CIT(A) has wrongly confirmed that appellant has failed to file evidence that VAT charged @4% from the beneficiaries
3|Page Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 on accommodation bills were actually refunded to the beneficiaries or deposited with the trade tax department. iii. Ld CIT(A) fell in error in confirming the upscaling the rate of commission artificially from 1.5% to 2%.
iv. Ld CIT(A) omitted too consider that actual rate of commission, based upon seized documents, workout to 1.26% and after reducing the expenses, it works out to 0.76%.
3. That the ld CIT(A) in confirming addition of Rs. 5456000/- on account of unexplained investment.
4. That the ld CIT(A) erred in confirming the addition of Rs.
4860000/- on account of unexplained investment.
5. That the ld CIT(A) in confirming the addition of Rs. 3771000/- on account of unexplained investment."
7. The assessee has raised the following grounds of appeal in ITA No. 3775/Del/2014 for the Assessment Year 2011-12:-
"1. That the order passed by the ld CIT(A)-XXXII is bad in law and on facts.
2. That the ld CIT(A) has grossly earned in confirming the addition of Rs. 7342022/- because .
i. Ld CIT(A) has wrongly held appellate failed to furnish any documentary evidence to show that infra transactions between the firms were not business transactions through which accommodation entries were provided.
ii. Ld CIT(A) has wrongly confirmed that appellant has failed to file evidence that VAT charged @4% from the beneficiaries on accommodation bills were actually refunded to the beneficiaries or deposited with the trade tax department. iii. Ld CIT(A) fell in error in confirming the upscaling the rate of commission artificially from 1.5% to 2%.
iv. Ld CIT(A) omitted too consider that actual rate of commission, based upon seized documents, workout to 1.26% and after reducing the expenses, it works out to 0.76%.
3. That the ld CIT(A) in confirming addition of Rs. 240000/- on account of unexplained investment."
8. In view of the above facts it is apparent that except difference in the amount of addition, for all these six appeals , facts and circumstances of the case remains the same. Therefore, we first cull out the facts for AY 2006-07 and decide the issues involved therein. Thereafter we will apply
4|Page Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 our decision for AY 2006-07 to the appeals of the assessee for other years.
9. Search u/s 132 was conducted on 26.04.2010 in case of M/s. Vaibhav Jain and Navneet Kumar Jain group of cases. The notice u/s 153A of the Act was issued on 11.04.2011 and return was filed on 25.10.2012 at Rs. 482642/-. During the course of search it was found that assessee is engaged in the business of providing accommodation entries through bogus purchase bills from the various firms and entities owned and controlled by the assessee. The statement of the assessee was recorded during the search u/s 132, post search proceedings and in assessment proceedings wherein they confirmed that they are providing accommodation entries through bogus purchase bills issued from various entities. The ld Assessing Officer recorded the whole modus operandi of the assessee in paragraph no. 3.2 onwards which is important to understand the facts of the case:-
"3.2 Modus operandi of the entry operators was as follows Sh. Vaibhav Jain and Sh.Navneet Jain were operating this business in close association with other operators. Vaibhav Jain and Navneet Jam were operating number of proprietary concerns in name of family members and poor employees for issuing paper sales bills f without delivery of goods to end users through many brokers. Entry Operators opened various bank accounts in the name of several proprietary concerns for this purpose. They issued bogus/paper bills of various items against cheques received from the beneficiaries/end users. These cheques were deposited in the bank account of concerned proprietorship concerns. Subsequently cheques were issued in the name of other concerns controlled by Sh Vaibhav Jain (who was issuing bogus bills without actual delivery of goods) which was deposited in the respective bank account of the concerns/proprietors and j cash of equivalent amount was withdrawn and was given to the beneficiaries/end users which had taken bogus bills against cheques after deducting commission.
3.3 During the course of search and seizure operation u/s 132, it was found that assessee is engaged the business of providing accommodation entries through own proprietorship concern and other paper proprietorship concern formed in the name of your employee & relatives. In your submission you have accepted die control and management of all the. firms.. In your . statements recorded u/s 132(4) and 131 you have admitted, that control and management of these firms is with you.
Name of the firm Proprietors name
1 Delhi Steel Himanshi Arora
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2 Om Sai International Himanshi Arora
3 Omaxe Overseas Himanshi Arora j
4 Rajasthan Metal Himanshi Arora
5 Ram JI Traders Himanshi Arora
.
6 Shree Balaji International Himanshi Arora
!
7 Shree Balaji Trading Co. Himanshi Arora
•
8 Shree Ganesh Enterprises Himanshi Arora -
9 Vardhman Enterprises Himanshi Arora
10 Shree Krishna Traders Himanshi Arora ^
*
11 . Hanuman Trading Co. Anjali Sharma
12 Laxami Traders Anjali Sharma
13 Vansh Impex Anjali Sharma
14 Bhavani Trading Co. Daizy
15 Shivam Metal & Steel Daizy
16 Heer Internaional Renu Sharma
17 Shree Krishna International Renu Sharma
18 Jagdamba Enterprises Subhra
19 Vinayak Traders Subhra
20 Jain Metal Co. Pawan Kumar
21 Mahaveer Trading Co. Pawan Kumar
22 Gopal Trading Company Sanjay Gupta
23 Tirupati Tradex Pawan Kumar
24 Samayak Trade INC Sanjay Gupta
25 Shubham Enterprises Sanjay Gupta
26 Vee Vee Enterprises Girdhari Lai Puri
27 My Fair International - Girdhari Lai Puri
28 Supremo Trading Co. Girdhari Lai Puri
29 Mayur Enterprises Tarun Puri
30 Shree Jee Traders Tarun Puri
31 Ansh Impex Vandana Jam
32 Arihant International Rinki Sharma
33 Ess Mart Enterprises Neha- Sharma
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34 Meted & Steel Ind. Llilf ' Raj Kumar Arora
35 Navneet Kumar Jain & Sons Navneet Kumar Jain
36 Saraswati Trading Co Poonam Sharma
37 Vee Kay International Vaibhav Jain
3.4 Admission of Shri Vaibhav Jain, Sh Navneet Kumar Jain and other proprietors:
During research proceeding search proceeding, post-search proceeding the statement of various persons were recorded, in whose names the paper entities i.e. proprietorship firms were opened. During the assessment proceeding also the statements of key person i.e. Sh Vaibhav Jain , Shri Najvneet Kumar Jain controlling the entire business of bogus accommodation entry were again recorded. All the proprietors and key persons i.e. Sh Vaibhav Jain, Sh Navneet Kumar Jain .controlling the entire business of bogus accommodation entry have time and again confirmed and re-confirmed categorically that they are providing only bogus accommodation entry bills and no goods are ever supplied on the sale invoices raised by them in favour of beneficiaries of accommodation entries.
3.5 The relevant portion of the statements of key person i.e Sh Vaibhav Jain , Sh Navneet Kumar Jain .controlling the entire business of bogus accommodation entry and other proprietors are re-produce as under:
Statement dated 22.05.09 of Shri Vaibhav Jain Q3. Please tell about the concern in which you and your family members are interested.
Ans. I am proprietor of firm M/s Vee Kay International- A-94/2, Wazirpur Inal. Area, New Delhi my father Sh. Navneet Jain is proprietor of M/s Navneet Kumar Jain & Sons- A-94/2, Wazirpur Indl. Area, New Delhi.
Q4. Please provide the details of all the bank accounts of M/s Veekay International.
Ans. At present/there is only one bank of the concern in Karur Vysya Bank, Lav/rence Road, New Delhi- A/c No. 4102. Prior to this, the firm also had account with Punjab National Bank, New Delhi Rohtak Road, New Delhi A/c No. 51887 and with ABN Amro Bank, Rajouri Garden, New Delhi. Old branch name was Hansalya Building, Barakhamba Road, New Delhi. Account No. of ABN Amro Bank Branch, are 941803, 1313318 and 1453954.
Q5 am showing you the copies of bank statement of M/s Vee Kay International A-94/2, Wazirpur Ind. Area, New Delhi A/c no.941803, 1313318 and 1453954 having customer ID 1037898 in ABN Amro Bank Rajouri Garden branch which total transaction of Rs.6.82,crofflsftave been made-between April 2004 to Sep 2008. You are requested to explain the. nature of transaction in the bank statement shown.
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Ans. I have carefully seen and understood the copies of bank statement of the these account in ABN Amro Bank in the name M/s Vee Kay International. The deposit entries represent proceeds of chegue/investment received from parties against sale bills and some transfer entries. The withdrawal's side of the statement mainly represent cash withdrawals from the bank and transfer entries 1 Faculty the firm had issued only paper sale bills/accommodation sale bills without delivery of any goods. The firm received cheque/investments from various parties agent these paper/accommodation sale bills and therefore cash was withdrawn from the bank to return the amount so received by cheque to the parties from whom the cheque was received. Apart from the above mentioned these accounts with ABN Amro bank, these are some other bank in the name of M/s Vee Kay International in Karur Vysya Bank, Lawrence Road, New Delhi and Punjab National Bank, New Rohtak Road branch New Delhi. These accounts have been used for some purpose as already stated by one above.
Q6. Please state as you have admitted in the answer to Q.No. 5 that you as proprietor of M/s Vee Kay International have been issuing paper bills/ bogus bills, whether any sales tax or other duties have lived by you at the time of issuing bogus bills.
Ans. As desired by the purchasers, of the paper bills whish one in the nature of accommodation entries for purchases for the purchasers, the sales tax is included in the sales invoices however the amount of sales tax is return to the purchaser as and when the payment/cheque were received from the purchaser, similarly levy of VAT was also included on the bills when ever desired by the purchase and returned to the purchaser as in the case of sales tax.
Q8. I am showing you the bank statement of M/s Vee Kay International of Bank accounts in ABN Amro, Karur Vysya bank and PNB New Rohtak, New Delhi. Please carefully go through the statement and explain about the nature of the transfer entries and also provide the details of persons/ concerns with whom and for what purpose these entries have been made?
Ans. I wish to place in record that besides M/s Vee Kay International, These were same other people also who were carrying similar activities under their respective proprietorship concern. Each of such persons has interest in his/ her concern. The above mentioned transfer entries have been mostly with these concern. These transfer entries were made to facilitate high value of cash withdrawal for the purpose of returning back to the beneficiaries the amount in cash in lieu cheques from them.
Q9. Please give the complete name and address of the persons/concerns alongwith the name and address of all its proprietors as stated by you to be engaged in the business of issuing paper bills/ accommodation bills. You are also requested- to state your relation with and role in these concerns.
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Ans. The name of the concern are as under:
1. M/s Heer International
2. M/s Supremo Trading Co.
3. Shree Balaji Trading Co.
4. M/s Shivam Metal & Steel Traders
5. M/s Ramji Traders
6. M/s Saraswati Trading Co.
7. M/s vardhman Enterprises
8. M/s Hanuman Trading Co.
9. M/s Shubham Enterprises
10. M/s My Fair International
11 M/s Shree Krishna International
12. M.S Vansh Impex
13. Delhi Steel Agencies
14. Om Sai International
15. M/s Metal and Steel India
16. Shree Krishna Traders
17. M/s Samayak Traders
18. M/s Gopal Trading Co.
19. M/s Rajasthan Metal
20. M/s Vee Vee Enterprises
21 Shree Jee Traders
22. Mayur Enterprises
23. M/s Ess Mart Enterprises
24. M/s Navneet Kumar Jain & Sons
25. M/s Vishnu Fabricator
Though, I am not related with any of the owner of these firms except M/s Navneet Kumar jam and Sons of which my father is proprietor. This concern is looked after by me and all the transaction of this concern have also been done by me. As far of the other concern/firms are concerned, all the transactions in these firms have also been controlled by me. In the transaction in these firms have also been controlled by me. Intact all the transaction in the above mentioned concerns have been made by me. My role was to interact with the beneficiaries and to direct the proprietor to issue the paper bills. The cheques received by me for the paper bills issued by the above mentioned concerns where deposited in the bank and cash was withdrawn and return to the beneficiaries from discussion and control only the proprietor of the above mentioned concern were also receiving part of profit so generated in the transaction of sale of paper bills/accommodation entries done by the above mentioned concerns.
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Q10. I am showing you the copies of statement of the proprietorship concerns mentioned in your answer to question no.9 of the statement, of the banks accounts mentioned in ABN Amro Bank, Rajouri Garden, New Delhi, Karur Vysya bank Lawrence Road, New Delhi and Punjab National Bank, new Rohtak Road, JTew Delhi. In these bank accounts There are transaction of approximately 600/- crore (Six Hundred Crores). Please explain the nature of transaction and the person with whom these transaction have been made as you have admitted that these concerns were actually controlled by you and the transactions have been made under your supervision and direction.
Ans. Most of the transaction in the bank accounts of the above mentioned concern are in nature of transfer entries among themselves. The deposit entries are the deposit of cheques received in lieu of sale of paper bills/ accommodation entries for purchase from the beneficiaries. There have been also frequent instances of substantial cash withdrawal which 'were used To return back to the beneficiaries after deducting a fraction of it as profit margin.
Q11. I am showing you the bank account opening form received from ABN AMri, and Karur Vysya Bank and PAB New Rohtak Road, New Delhi. In whish the name and address of firm and its proprietor are given which are as under:
Prop A/c
1. M/s Vardhman Himanshi Himanshi Arora 4102-135-270 Karur
Enterprises Vysya
2. M/s. Navneet Kumar Jain & sons Shri Navnnet 4102-115-17787 Bank
Kumar Jain Lawrence
3. 3M/s Om Sai Internationa Sai Himanshi Arora 4102-115-356 Road
Karur
4. M/s. Vansh Impex Anjali Sharma 4102-115-12496 Vysya
5. M/s Vardhamn Enterprises Raj Kumar Arora 4102-115-12496 Bank
6. M/s Hanuman Trading Co. Ms Neha 4102-115-13714 Lawrence
7. M/s. Vishnu Fabricator Vishesh 4102-115-14172 Road
8. M/s. Ess Mart Enterprise Ms. Neha 4102-115-14821 Karur
9. Shree Bankey Bihari Trading Himanshi Arora 4102-4102-115- Vysya
Company 13077 Bank
10. M/s. Rajasthan Metal Himanshi Arora 4102-115-13280 Lawrence
11. M/s. Delhi Steel Agency Himanshi Arora 4102-115-13290 Road
12. M/s. Vansh Impex Neha 4102-115-13605
13. M/s. Ramji Traders Himanshi Arora 4102-115-13629
14. M/s. Shivam Metal and Steel Himanshi Arora 4102-115-13631
Trader
15. M/s. Ramji Traders Daizy 4102-115-12792
16. M/s. Saraswati Trading Co. Poonam Sharma 4102-115-12801
17. M/s. Ess Mart Enterprise Ms. Neha 4102-115-15843
18. M/s. My Fair International Girdhari lal Puri 4102-115-15175
19. M/s. Vee Vee Enterprise Girdhari lal Puri 4102-115-15199
20. M/s. Samayak Trade Inc. Sanjay Gupta 4102-115-15516
21. Shree Jee Traders Tarun Puri 4102-115-15573
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22. Mayor Enterprise Tarun Puri 4102-115-15585
23. Heer International Himashi Arora 4102-128-22
24. Shri Balaji International Himashi Arora 4102-127-270
25. M/s. Metal and Steel Raj Kumar 4102-127-270
26. M/s. Samayak Trade Inc Sanjay Gupta 4102-115-16854
27. M/s. Subham Enterprises Sanjay Gupta 4102-135-268
28. Vee Vee Enterprise Girdhari lal Puri 1445459
29. M/s. Vee Vee Enterprise Girdhari lal Puri 1300390
ABN..
Ess Mart
30 Raj Kumar 142868T Amro
Enterprises
bank
ABN
Shree Balaji
31 Himashi Arora 1291794 Amro
Traders
bank
ABN
Navneet Kumar Navneet
32 1313320 Amro
Jain & Sons Kumar Jain
bank
ABN
Vee Kay
33 Vaibhav Jain 1313318 Amro
International
bank
ABN
Samayak Trade
34 INC Sanjay 1429368 Amro
*
bank
ABN
Navneet " Kumar Navneet
35 1457153 Amro
Jain & Sons, Kumar Jain
bank
36 Gopal TradingCo. Sanjay 1458704 ABN
Amro
bank
ABN
Vee Kay
37 Vaibhav Jain 1453954 Amro
International
bank
ABN
Navneet Kumar Navneet .
38 1005460 ' Amro
Jain & Sons Kumar hain
bank
ABN
Vardhman 1340811
39 Renu Sharma Amro
Enterprises -. •
bank
ABN
Vardhman
40 -Renu Sharma 1428772' Amro
Enterprises
bank
ABN
41 Heer International Renu Sharma 1339902 Amro
bank
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ABN
42 Metal & Steel Raj Kumar 1453956 Amro
bank
ABN
Vee Kay
43 Vaibhav Jain 941803 Amro
International
bank
ABN
Metal and Steel
44 Raj Kumar 1328671 Amro
(India)
bank
ABN
Ess mart
45 Raj Kumar 1328671 Amro
Enterprises
bank
ABN
46 Mayur Enterprises Tarun Puri 1440031 . Amro
bank
ABN
4-7 Shree Jee Traders Tarun Puri 1439997 Amro
bank
48 M/s Supremo Girdhari Lai 4102-1 15-15291 Karur
49 M/s. Heer International Himashi Arora 4102-128-308
50. M/s. Heer International HImanshi Arora 4102-128-34
You are requested, go through carefully the above list of concerns and their account Opening form and confirm that these accounts were operated by you or the proprietor mentioned against the respective concern under your consideration your discussion and supervision. You are also requested that all *he above mentioned bank accounts were used by you or by the proprietor under your control and direction for the purpose of providing accommodation entries for purchases by beneficiaries.
Ans. I have carefully gone through the above mentioned list of concern and their proprietor and bank accounts. I have also carefully gone through the account opening forms of all the bank accounts of list. I confirm that all the proprietors are known to me and have been engaged in business of providing accommodation entries for purchases/ sale of paper bills with me. I also confirm that in the operation of above mentioned bank account have work under my control and direction. I also confirm that the above mentioned bank account has been used for providing accommodation entries for purchases and issue of paper bills various beneficiaries.
Q12. As you have admitted that, the above mentioned bank account either used you or under your direction or control, you are requested to produce the copies of the bills issued 12 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 by above mentioned concern and details of beneficiaries alongwith amounts of respective accommodation entries or paper bill issued to various beneficiaries, Ans. The copies of the sale bills issued by the above mentioned concern were discarded as soon as he transaction related to the respective bills are over. Further no books of accounts of any of the concern have been maintained. However the details of all the sales transaction are reflected in the statement of respective bank accounts in which cheques received from beneficiaries were deposited. I commit and ensure that the complete details of beneficiaries from whom cheques have been received and cash amount have been repaid on account of accommodation entries for purchases provided through the above mentioned concern will be submitted by me shortly.
Statement dated 04.06.2009 of Sh Vaibhav Jain Q3. I am showing the following statement received on oath of the person.
1. Neha Sharma Prop. Ess Pee Enterprises, Hanurnan Trading Co. vansh Impex, statement dated 08.05.2009 and 15.05.2009.
2. Renu Sharma Prop. Pleer International, vardhman Enterprises dated 08.05.2009
3. Sh. Tarun Puri Prop. Mayur Enterprises, M/s Shree Jee Traders statement dated 25.05.2009.
4. Sh. Girdhari Lai Puri Prop. M/s Supremo Trading Co., Vee Vee Enterprises, Prop.
M/s My Fair international statement dated 06.05.09. (i) Smt. Neha Sharma ! i) Renu Sharma (iii) Tarun Puri in his statement admitted that the accounts of the above said firms of which they are proprietors are controlled by you. Sh. Girdhari Lai Puri in his statement admitted that he firms of which he is proprietors are controlled by Sh. Navneet Kumar Jain B-8/15-16, Sec-11, Rohini. Do you want to say any thing in this regard.
Ans. As I have already stated' that these persons were operating their respective bank accounts under my supervision and direction Sh. Girdhari Lai Puri has name My Father Sh. Navneet KUmar Jain although he also operated his bank account under my supervision and direction.
Statement dated 26.04.2010 of Sh. Vaibhav Jain Ql. Please identify yourself?
Ans. I am Vaibhav Jain S/o Sh. Navneet Jain R/o B-8/15-16, llnd Floor, Sector-l 1, Rohini, Delhi-110085. I arn 'showing my driving license issued by the transport department Delhi having no.P0811200653362.
Q2. Please give the details of your business or one other source of income?
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Ans. I am a commission agent, my main activity is. to provide entries to the different parties. Currently, l am trading in utensils of steels.
Q8. Kindly explain in brief the procedure of your business of commission and giving entries to acommodates to the parties.
Ans. We were accommodation entries of sale to the parties, in response to the entries parties issues a cheque in our company name. After the clearance of cheques we deduct part of our commission i.e.0 .5% to 1% and then again we return back to the balance money in the form of cheque/ cash to the same party.
Q9. Since how long you are doing the work of accommodation entries? And z so give none of your concern in which you and your father involved trough which these accommodation entries are facilitated.
Ans. I aiongwith my father through our various concerns, I am doing work of accommodation entries for the four- five years, following are the names of concerns in which me and my father are involved for providing accommodation entries.
1. Ess Mart Enterprises
2. Delhi Steel Agency
3. Gopal Trading Co.
4. Hanuman Trading Co.
5. Metal & Steel (India)
6. Heer International
7. Mayur Enterprises
8. My Fair International
9. Navneet Kumar Jain & Sons
10. Rajasthan.Metal
11. Om Sai International
12. Rarhji Traders
13. Sarnayak Trade Inc.
14. Saraswati Traning Co.
15. Shivan Metal & Steel Traders
16. Shree Balaji International
17. Shree Balaji Trading Co.
18. Shree Jee Traders
19. ShTee Krishna International
20. Shree Krishna Traders
21. Subham Enterprises
22. Supremo Trading Co.
23. Vansh Impex
24. Vardbma a Enterprises
25. Vee Kay International
26. Veejty.ee Enterprises
27. Vishnu Labricators 14 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 The above firms having various addresses for which details of the same will be submitted to your office af Jhandewalan later on, Since all the firms have been closed except office at A-94/2 Wazirpur Industrial Area, Delhi is running currently^ have stopped the work of giving accommodation entries for the last two years.
Q14. What is the total quantum of accommodation entries provided given by your all concerns in the last six years and how much profit earned by you.
Ans. The total quantum of accommodation entries provided by our all I concerns has already been submitted to the Income Tax Department Jhandewalan earlier. I have already filed revised return of income in respect of I income earned by me on the above transaction.
10. Statement on oath of Shri Vaibhav jain, recorded u/s 131 of the Act during the proceedings u/s 153A in his case on this date of 13.02.2013 by the ld AO where also he confirmed that he is engaged in providing accommodation entries of bogus bills. In answer to Question no. 4 he confirmed that during the FY 2004-05 to 2010-11 he has provided bogus purchase bills of Rs. 650 to Rs. 700 crores. He further gave the name of 38 concerns from which he has provided these entries.
11. Further the ld AO on 26.04.2010 recorded the statement of Shri Navneet Kumar Jain on 26.04.2010 who is father of the assessee, wherein he submitted that there are 27 other firms which are in the name of different persons to whom salary of Rs. 2000 to Rs. 3000/- is given for their name.
12. The ld AO further recorded statement of Shri Navneet Kumar Jain, father of the assesse, on 16.06.2010 which is as under:-
"Statement dated 16.06.2010 of Sh. Navneet Kumar Jain Q 11. Please state the nature of business activity of these concerns.
Ans. As I have already stated in my statement these concerns are run by my son Shri Vaibhav Jain for issuing bogus bill without actual delivery of goods. My son Shri Vaibhav Jain take cheques from the parties against the bills issued and return the cash to them after deducting his commission.
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Q13. In your statement you have stated that you am the proprietor of M/s Navneet Kuamr Jain and sons. Whereas your son Sh Vaibhav Jain in his statement has admitted that M/s Navneet Kumar Jain and Sons was engaged in providing Bogus Bills under his control. Whar do you say in this regard.
Ans. Yes I am the proprietor of M/s Navneet Kumai Jain and Sons. But the transactions in this forms was controlled by Shri Vaibh Jain. It is also true that the firm was engaged in providing bogus/ papers bills actual delivery of goods.
14. As you have admitted that you are the proprietor of M/s Navneet Kumar Jain and sons buy this concerns is controlled by Shu Vaibhav jain. Please state who operated the bank account and bank account transaction of this concerns.
Ans. I signed the cheques of the concerns but Sh. Vaibhav Jain used the cheques and controlled the transaction of the bank account.
Q15. You have stated that the firm M/s Navneet Kumar Jain and Sens is controlled by Shri Vaibhav Jain but the documents related to this concerns like bank documents, sales tax returns are signed by you. On what you have stated that this firms is controlled by Sh. Vaibhav Jain.
13. Further statement of Navneet Kumar Jain was also recorded u/s 131 of the Act on 22.02.2013 wherein, he once again confirmed the facts of the case as stated by him earlier. Further, the statement of Mrs. Neha Sharma was also recorded on 08.05.2009 who is the so called proprietor of Ms/ Hari International which is used by these two persons as a conduced firm for providing the bills. She denied having any source of income and stated that she is a house wife. She also denied having open any bank account. in fact according to her statement she does not know anything about the transactions entered into Hari International by the assessee of providing bogus bills. Similarly statement of Shri Tarun Puri was also recorded on 18.05.2009 who also reiterated the identical state of affairs.
14. Further statement of Shri Girdhari lal Puri was also recorded on 06.05.2009 and 18.05.2009 which is as under:-
"Statement dated 06.05.2009 of Shri Girdhari lal Puri Q.3 Please give the details regarding your source of income.
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Ans. I am presently working as employee with M/s. Sakshi Metal, having office At A-72, monthly salary at Rs. 6000/- per month.
Q.8 Please give the details of firm/ proprietorship concern/ company in which you are interested since 2002.
Ans. I don't run any firm/proprietorship concern/ company since 01.04.2002.
Q9. I am showing you the account opening form of ac of a/c; no. 4102-115- 15291 in the name of M/s Supremo Trading Company with karur Vysya Bank Lawrence Road, .Delhi. In your photo is posted and your driving license copy and copy of PAN is attached. Please go through the documents and confirm whether this account was opened and operated by you.
Ans. I have gone through the account opening form and annexure A confirm that the photo posted, signature, copy of driving license are of mine only. However the copy of PAN card which is annexure to it has and been issued to me as I have never applied for any PAN card. I want to clear that this account v/as opened by Sh. Navneet Kumar Jain S/o Recti Saram Jain r/o B-8/15-16 sector-11, Rohini New Delhi. Having office at A.94/2, Wazirpur Industrial Area New Delhi, by taking my signature and identify documents.
Q10. Please state if you have not opened this account than how your documents and -the signed account opening form reached tosh. Navneet Kumar Jain as alleged by you have opened the account.
Ans. Sh. Navneet Kumar Jain is known to one for 4(four) years He approached me and offered me son incentive in form of Rs.500/- per month and ask me for my signature on the account opening form and copies of immediately documents for opening of bank account in my name. I admit that 1 was av/are that the bank a/s was opened in my name but for what purpose and transaction, the acclaim was used, 1 v/as never aware of that and never brought to my notice by SH. Navneet Kumar Jain.
Q 11 Please state as your signature is an the designated of account opening form, how Sh. Navneet Kumar Jain make transaction in this account.
Ans. Initially, Sh. Navneet Kumar jain had taken my signature on around of 50 blank cheques of above mentioned acenil, through which he had done initially transactions. All the later transaction (if any) must have been done Sh. Navneet Kumar Jain using fake signature.
Q12. I am showing you the bank statement of account no. 4102-115-15291 from 17.01.2007 to 21.04.2009 in the name of Suproma Trading Co. maintain karur Vysya bank Lawrence Road Deli, please go through it carefully and state about nature of transaction and the name and complete address of the parties with whom these transaction were mode.
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Ans. As I already said that through the account is in my name it was never opened by me. Therefore I cant say anything about the nature of transaction and the parties with whom these transaction moan It is submit led that Sh. Navneet Kumar Jain may be able to explain these transaction as he has been opening this bank account from the-beginning.
Q16. In answer of question no. 2, you have stated that no PAN is allotted you, However in the account opening form copy of PAN card bearing No APZPP1903P is annexured. Please explain how the copy of PAN card is annerxure there.
Ans... As I have already said that I have never applied for my PAN card Sh. Navneet Kumar Jain to may have applied for the san>e to use if for his purpose.
Q17. Please state above the activities of Sh. Navneet Kumar Jain and about the firms/concern concealed by him.
Ans. - As far as I knows Sh. Navneet Kumar Jain is in the business of using bogus bills and providing accommodation entries. Further purpose of this he used to operate several banks accounts and firms in the name of his 'employees and other known person. His made opendie is to take signature on bank cheques from the person in whose name the bank account: are opened and use it as and when required. Same of the concerns controlled by Sh. Navneet Kumar Jain for the purpose of issuing bogus bills and accommodation entries are:
1. M/s Supremo Trading Co.
2. M/s Heer International
3. M/s Metal and Steel Inida
4. M/s Ramji Traders Statement dated 13.05.2009 of Sh. Girdhari Lai Puri Q3. How and why Sh. Navneet Jain opened the account mentioned in Q no.2.
Ans. Shri Navneet Kumar Kumar Jain used to provide accommodation entries and bogus bills for sales. For this purpose he opened several bank accounts in the name of his employees and other known, person like; met-and my son Sh. Tarun Kumar in good faith I had signed certain documents but how Sh. Navneet Kumar Jain used it. I don't know I also have no knowledge or nay interest in the bank a/c operator by Sh. Navneet Kumar Jain in my name.
Q4.' Please state whether you are aware that Sh. Navneet Kumar Jain is operating the above mentioned or any other bank accounts in your name.
Ans. I was aware of one bank account a/c no. 4102155000015291 M/s Supremo Trading Co. in karur Vysya Bank, Lawrence Road, New Delhi. In which I have been shown as proprietor this bank a/c was opened by Sh. Navneet Kumar Jain by offering me monitoring 18 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 initiate of Rs. 500/- per month. Except this account, I was not aware of any other account operated by Sh. Navneet Kumar Jain in rny name as proprietor of various concern.
Q5. Please state, if you were not aware the other bank accounts on them how your photo and document as well as are present in the account opening form of the above mentioned bank accounts.
Ans. As I have already stated that Sh, Navneet Kumar Jain had taken my documents, photocopies and signature on several papers in to the opening of bank accounts in the name of M/s Supremo Trading Co. in Lawrence Road, New Delhi. He may have used these accounts for opening of the other bank accounts.
Q6.' Please state whether Sh. Navneet Kumar Jain has operated any other bank account in the name of any of your family members.
Ans. Sh. Navneet Kumar Jain has been operating same bank account in the name of two concerns namely (i) M/s Mayur Enterprises (ii) M/s Shree Jee Traders in which my son has been shown as proprietor. The number of bank accounts in the name of the controlled by Sh. Navneet Kumar Jain in the name of my son or . alleged proprietorship concems is not known to me.
Q.7 Please state above the nature of business of your son.
Ans. My son is petty technical and do some small job of transformer. He is neither income tax payer nor has any PAN his income is below taxable limit.
15. Further, the statement of Shri Sanjay Gupta was recorded on 26.08.2009 who also denied having any knowledge about his concern i.e. Gopal Trading Company. Similarly, statement of Shri Krishna Kumar Sharma was also recorded by the ld Assessing Officer.
16. Further, after recording all the statements the ld Assessing Officer considered the explanation of the assessee with respect to the whole of the transactions and held as under:-
"3.6 The details regarding transaction made in the bank account of 37 firms-mentioned in Para-3.3 above were collected from the banks . As per the details collected from the bank the total amount of accommodation entries provided by the entry operators amount to Rs. 9804783249/-. The details of year wise bank transaction done by the assessee, which has been found credited in the respect of accounts is enclosed as per Annexure-A. The credit entries of the bank accounts have been taken to the accommodation entry Vide show cause dated 12.03.2013 the assessee was confronted with the specific query as to why the quantum of credit entries as determined from the bank accounts of the above 19 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 firms may not be taken as total of accommodation entries provided during the FY 2004-05 to 2010-11, which was earlier confronted vide office notice u/s 142(1) dated 06.03.2013 also. In reply filed on 11.03.2013 assessee has stated that the turnover of 925.05 crores involved inter transfer among the 37 firms. He stated that after excluding the turnover of inter firms transfer and transaction of saving bank accounts the total turnover of all the firms is Rs. 662.13 crores. He was requested to justify his submission with evidence that the inter unit transfer between the firms as claimed by him is not part of turnover. For deciding the income of the assessee on account of business of bogus entry operation by the 37 firms, three key factus which are to be decided are as under:-
The ownership and control of the firms.
(ii) The quantum of turnover.
(iii) The rate of commission to be applied.
3.7 Ownership and control of the firms
3.7.1 The assessee in its pre-search statements, during search proceedings post search proceedings has accepted the ownership of all 37 proprietorship concerns as mentioned in para 3.3 above. In its submissions the assessee has accepted the control and management of all the firms. In statements recorded u/s 132(4) and 131 also it has been admitted that control and management of these firms lies with Sh. Vaibhav Jain, the assessee was confronted on the issue. The assessee's submission on the issue are reproduced as under:-
3.7.1.1 Reply Dated 08.03.2013 That the turnover of all concerns belong to the respective owner/proprietor (except the firm, controlled by Sh. Navneet Kumar Jain, that is M/s Navneet Kumar Jain & Sons, which firm and transactions are being owned by the assessee.
The turnover of other firm/concerns is solely being admitted by the assessee only for the fact that the paper business was being referred to the firms by the assessee.
3.7.1.2 Reply dated 11.03.2013 It is submitted that the details of these paper concerns, whose proprietors were not only as such in name, but also in risk, reward, benefits and liabilities, and the turnover whereof have been offered merely for the limited purpose of facilitating the cause of revenue such that the beneficiaries/accommodation bill seekers could be identified, have already been stated yearwise and concern-wise vide our earlier replies dated 01.03.2013 (page 01) and also vide reply dated 08.03.2012 (page 14).
3.7.1.3 Reply dated 21.03.2013 In this regard, it is submitted that during the captioned assessment year, the assessee had operated through various concerns in providing accommodation bills/paper bills. It is submitted that the bank statements of various firms operated by the assessee are in the name of the proprietary concerns/ firms and the respective proprietor/ owner thereof, except M/s Navneet Kumar Jain '& Sons (HUF), couid 20 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 at best possibly refer/ explain the nature of each entry, since no books of accounts were being maintained.
3.7.1.4 Give detail of additional income shown if any along with basis of arriving this additional income: - In this regard, it is submitted that the details of additional income offered by the assessee prior to the date of Search and after that have been arrived at by applying a net commission rate of 0.102% to the earlier turnover of the accommodation firms which was at that time taken at Rs. 6,63,85,86,645/-.(See page 01 of reply dated 01/03/7013).
317.1.5 It is submitted Sir, that in fact a perusal of the overall reconciliation of the alleged turnover as confronted By your goodself and as reconciled by the assessee assessee would reveal that the earlier turnover was incorrectly token at Rs.68586645/- instead of actual one at Rs. 6,62,13,21,866/- (refer page 01 & 02 of re ply dated 11/03/2013), which was thus earlier excess by Rs. 1,5742,840/-. It is further submitted that the revised lower turnover is not being disputed qua the earlier turnover, based on which, additional income was returned even prior to the date of search.
3.7.1.6 Reply dated 21.03.201 In this regard it is submitted that the above observation is based on factual submission and has been borne & brought out 'n' number of times before the investigation wing, prior to the search, during the course of search, during the post search investigations and also during the course of assessment proceedings, including but not limited to even the deposition of the assessee on oath before your goodself that he was engaged in the business of the providing accommodation/ paper bills.
3.7.1.7 In the last part of the instant point, your goodself has observed that the assessee has accepted the control & management of these firms (37). In this regard it is submitted that the- assessee has no where stated that the control & management of these firms vested' with him. Your goodself would appreciate that the assessee has merely contended that the turnover is being determined for the limited and sole purpose of determining the actual turnover of business which the assessee referred to these 37 (but 1) firms in lieu/want of commission. It is submitted that it can't and should not be thus held out that the assessee was controlling or managing the alleged firm/ entities.
3.7.2 The submission of the assessee were duly considered and are not acceptable. The reason for not accepting the submission of the assessee regarding limited liability of the paper entities are discussed as under:
3.7.2.1 The assessee Sh Vaibhav Jain in his statement which have been reproduced above para-3.5 Have clearly and categorically admitted that he had complete control and subserviced the transactions of all the firms.
3.7.2.2 The proprietors of paper entities in their statements recorded during search proceeding and pre-search proceeding have admitted that they are petty employees of Sh 21 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 Vaibhav Jain drawing a salary of Rs.3000/ - to Rs.5000/- . They have also submitted that these account was opened in their respective names on the pretext of depositing salaries.
Subsequently, these accounts and cheques books were used by Sh Vaibhav Jain .for giving accommodation entries without their knowledge.
3.7.2.3. Sh Navneet Kumar Jain Father of Sh Vaibhav jam has also admitted that Sh Vaibhav Jain had complete control of the thirty-seven firms given in par 3.3 above. He has also stated that the bank accounts of these employees were also us...d for providing accommodation entries and in return the employees were compensated by giving some extra salary.
3.7.2.4 It is seen that most of the firm have been open at the address of the Sh Vaibhav Jain. The accounts of the paper entities have been introduced in merry sf the cases by Sh Vaibhav Jain.
3.7.2.5 Sh Vaibhav Jain in para-3.7.1.5 have admitted' that total turnover of accommodation-entries provided has been taken at Rs. 6,63,8586645/- instead of actual one at Rs. 6,62,13,21,866/- has been shown in return of income. This clearly shows that the assessee accepts the ownership and control of all the thirty-seven firms as given in para-3.3 above.
3.7.2.6 In view of the aforesaid discussion it is clear that Sh V;.'' h. Jain was not only the master mind behind the entire operations of providing accommodations entries through a maze of thirty-seven paper entities, but is being have that Sh. Vaibhav jain was the sole owner of all these benamy proprietorship firms which he had used for providing accommodation entries.
3.7.2.7 This maze of thirty seven firms used because the assessee cannot withdraw more than the specified limit in particular day from bank secondly this layering and maze of thirty seven firm were used to hide the VAT collected from the beneficiaries without depositing with the appropriate VAT authorities. There by the assessee were earning extra money on account of VAT collected from the beneficiaries which was neither deposited with the appropriate statutory VAT authorities nor it was refunded to the beneficiaries.
3.8 Quantum of turnover 3.8.1 The assessee was confronted on the issue. The assessee submission on the issue are reproduce as under
3.8.1.2 Reply filed on 08.03.2013 that we have directed most respectfully that while determining the alleged turnover at Rs.925,05,65,545/-, your goodself have omitted to consider the following facts:-
a) That turnover has been estimated by taking the aggregate credits of the aggregate bank accounts of each of the accommodation firm.
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b) That the aggregate credits can't be said to be the turnover of the assessee, since the transfer entries/mutual entries i.e. transfer of amounts between one firm and another firm have not been reduced by your goodself.
c) That there are instances of cheque bouncing (returned/unpaid) and as such single credit has been considered for more, than once.
d) That apart from this, the instances of cash deposit, attributable to deposition of same and which also deserves to be reduced from the aggregate turnover estimated by your goodself.
That accordingly, after carrying out the above adjustment, the aggregate turnover for the limited purpose of the being considered for applicability of commission rate, Sir, it is submitted that a comprehensive chart showing the name of the paper concerns, name of proprietors, PANs, Bank A/c's wise, assessment year wise reconciliation showing the turnover as determined by your goodself and as for the assessee calculation is being attached as per page 11 to 13.
3.8.1.3 Reply dated 11.03.2013 -In this regard it is submitted that summary of a" the year wise bank account transaction owned by the assessee which reveal the total turnover amounting to Rs. 6621321866/- are being separately filed along with the summary chart provided by your good self alleged turnover amounting to Rs. 9260497837/- is attached.
3.8.1.4 Reply dated 11.03.2013 regarding the same, it is submitted that as already explained to your good self, based on information receive respective proprietor neither any books were maintained , nor the copies of the paper bills are available. It is submitted that the moment the transaction wrt a bill would be over i.e. cheque realized & cash paid back the bills would be destroyed.
3.8.1.5 Reply dated 21.03.2013 Copies of your bank statements in res poet of all bank accounts held by you during the years alone with narration in respect of each debit and credit entries:- In this report!, it is submitted that during the captioned assessment year, the assessee had operated through various concerns in providing accommodation bills/ paper-bills, it is submitted that the bank statements of various firms operated by the assessee are in the name of the proprietary concerns/ firms and the respective, proprietor/ owner thereof, except M/s Navneet Kumar jain & Sons {HUFj, could at best possibly refer/ explain the nature of each entry-, since no books of accounts were being maintained.
3.8.1.6 Reply dated 21.03.2013 That the herculious task of typing, identifying and lastly reconciling the credits of 37 firms, that is of 7 different years involving 100 bank accounts were completed by the assessee within a short span of 5 days i.e. between 03/2013 to 10/03/2013. It is submitted that the reconciliation of firm-wise, bank account wise and year wise reconciliation between the turnover as per revenue and as per assessee was submitted as part of reply dated 1 1/03/2013 only to find out that the assessee is being show cause again as to why the reconciled turnover as per the assessee version be not 23 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 disregarded. Sir in this submission showing the detailed reconciliation, it has been contended that the inter party transfer between the accommodating firms, cheque bouncing are to be excluded out of the alleged turnover as per revenue, which is purely based, in the earnest humble of the assessee, on tire aggregate of bank credits as reflected in the bank statements.
3.8.1.7 Sir, while the above facts can be verified even from proprietors exercise the powers relating to summons, discovery and production availed would be appreciated that around 99.99% of these inter-parties transfer are multiples of ten thousands or lacks i.e. have '0000' or '00000' as the la: fact clearly indicate that transaction does not pertains to sale/purchase la from one bank account of accommodating firm to another account of located in the same branch.
3.8.2 The submission of the assessee regarding total turnover were duly acceptable. The reason for not accepting the submission of the assessee are not acceptable. The reason for not accepting the submission of the assessee are discussed as under:-
3.8.2.1 The details of the year wise turnover of the thirty seven firms in the bank accounts was given confirmed to the assessee to show cause dated 12.03.2013.
3.8.2.2 The assessee in his statements have admitted that the books of account are neither maintained nor is available with the assessee. In absence of books of accounts the trim over has been-taken as the amount which was credited in the respective bank accounts.
The assesses bas also not tiled any documentary evidence to rebutt the quantum of the turnover. The assessee has stated that I he intra transactions between the lines should not be included in the total turnover. In this regards the' assessee was required to furnish documentary evidence that these intra transaction between the firms are not business transaction through which accommodation entries have been issued. Assessee has tried to give some hypothesis without any supporting evidence. In absence of any documentary evidence the amounts credited in the banks account are to been taken as the year wise turnover of the respective firms.
3.8.2.3. The assessee has claim through reply filed on 11.03.2013 that the turnover in respect to account no. 4102135000000185 in the name of Shree Shyam Traders, does not belongs to Vaibhav .lain Group therefore its credit of 6.06 crore should be excluded from the total accommodation entries quantum of the assessee. The submission of the assessee is accepted as the accounts belongs' to' Vishesh Gupta group therefore the turnover of 6.06 crore is being excluded from here.
3.8.2.4 The assessee has also claim that the turnover included in respect to saving bank accounts should be excluded as the transaction relate to the respective parties. The details of accounts are as under:
Name A/c No.
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Ms. Anjali Sharma 4102155000082000
Ms. Anjali Sharma 4102155000083951
Ms. Himanshi Arora 4102155000081685
Ms. Himanshi Arora 4102155000083937
Ms. Neha Rani 4102155000088221
Ms. Neha Rani 4102155000082138
Sh. Pitamhor Jhn ' 4102155000083994
Ms. Poonam Sharma 4102155000082254
Ms. Renu Sharma 4102155000082621
Sh. Santosh 4102155000083982
Shree Shyam Traders 4102135000000185
Shree Balaji Trading Co. 1295020
The submission of the assessee was duly considered and is not acceptable. The aforesaid persons in their statements have categorically denied stating that all the transaction in the aforesaid accounts were controlled an operated by Sh. Vaibhav jain. In view of the aforesaid discussion the submission of the assessee in this regard is rejected.
3.8.2.5 It has been noticed that account numbers mentioned at Sl No. 109 to ITI in the enclosed annexure A were not confronted to the assessee in the show ca we notice dated 12.03.2013 However considering the facts these accounts also belongs to Vaibhav Jain therefore the transaction of the said banks are also included in the quantum of total accommodation entry provided. In view of the aforesaid fact and discussion the total of accommodation entries provided by the assessee through its 37 firms, in eluding its own firms and other paper firms which were controlled and directed b him. is being determined at Rs.980,47,33,249/-. for the F.Y. 2004-05 to 2010-11 (Annexure A enclosed) 3.8.2.4 The total of accommodation entries provided during the FY 2005-06 relevant to A.Y. 2006-07 are Rs.107,40,85,796/-
3.9 Rate of commission to be applied 3.9.1 The assessee was confronted on the issue. The assessee submission on the issue are reproduce as under
3.9.1.1 Sir. it is also submitted that the assessee has been continuously consistently stating, even prior to the search that he has been providing accommodation bills, by charging commission (gross not exceeding 50 paisa) and his net share is somewhere between 10 to 15 paisa. Your goodself .the assessee was able to achieve such a tremendous turnover because of the following facts:-
a. Very low rate margin of commission i.e. only about 50 paisa per reuppe hundres.
b. promptness & fairness in dealing i.e. cash would be returned to parties immediately upon clearing of cheque.
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The competitive rate of commission charged, given the fact that some of the paper bills would be VAT paid, though ultimately no VAT, as deposit able would have been deposited and that even VAT amount was refunded.
It is submitted sir that whereas the show cause refers the rate of commission- being charged bv the assessee as varying between 1.50%-3.89%, it is submitted that it seems that while adopting the said rates, your goodself seems to have omitted and completely overlooked the fact that the assessee would charge the commission on the overall Bill Value and the commission on entire book value/ Bill value would be recovered by him at the time of returning back of cash against first cheque/ payment received from the paper Bill seeker.
3.9.1.2 Note on Commission In this regard, it is submitted that assessee had already admitted vide statement on oath dated 26.01.2010 the fact that he is an entry provider and used to earn am d Yon from this business. It is submitted that, as informed to us, and as per the business practice followed by assessee, lie used to receive commission at the time when the entire bill amount was paid back to the entry receiver and as such at the time of final payment wrt the bill, payment was made after deducting due commission. It is further submitted that rate of commission varies with concerns and was between 50 paisa to 100 paisa per hundred rupee, as already a nit: b before search during search, post search investigation and also in assessment proceedings u/s 153A of the Act consistently.
3.9.1.3 It is submitted, and as staled in above Para also, wrt the entries specifically asked for justification by your goodself, commission was received only after full settlement of accommodation bill amount and as such commission shown as received on a particular page of Annexure A-3 represents commission received on total amount of entry provided to that respective concern instead of treating it as commission received on amount reflected on corresponding side of same page for that concern i.e. cash paid back to that concern wrt the entry provided to it. It is further submitted, even at the cost of repetition, that assessee was able to attain such huge turnover only because of meager rate of commission charged by him or the bill.
3.9.1.4 Apart from this, it is submitted that complete Annexure A-3, contains details maintained by a man for this record purpose and represents period only from January 2010 to March 2010 and would not be stated with perfection the total amount of accommodation entry provided wrt commission entry found due to a matter of lone, time back, limitation of human brain and absence of relevant documents. It is further submitted that it was tried at the best by the assessee tu recall the required details and as per the recalling power above chart is prepared : 'towing rate of commission earned.
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A Y 2006-07 to 2011-12
3.9.1.5 It is submitted that this was the gross commission and was subjected to be shared between the assessee and respective proprietor (around 70-75% would be paid to the proprietor), BCTT expenses, salary of staff, convenience expenses, rent and thus the net commission rate of 10-15 paisa per hundred rupee of paper Bill is duly justified 3.9.1.6 Sir, the list of 37 accommodating firm would reveal that after omitting two firms (i.e. M/s Vee Kay International and M/s Navneet Kumar Jain & Sons), all firms were having their own proprietor and obviously and naturally the proprietor would not under;: h acii paper transaction hut for lucrative profit. Thus a substantial amount of gross commission (around 70-75 % of 50 paisa) would be retained by the proprietor so as to meet out expenses such as transportation, conveyance, BCTT. other operative expenses, bank charges, convenience charges. rent and only nominal commission at the rate 10 to 15 paisa would paid back to assessee.
3.9.2 Vide show cause dated 12.03.2013 the assessee was confronted about the instance of charging commission up to the rate of 3.85%. The assessee was also confronted about the fact that VAT charged on the accommodation bills has not been refunded to the beneficiaries.
The submission of the assessee as discussed above para 3.9.1 were duly considered and are not acceptable. The reason for not accepting the submission of the assessee are as under:-
3.9.2.1 As per the assessee own seized material, the assessee has charged commission up to 3.85%.
3.9.2.2 As per the assessee own submission he destroys its books of account after work is over. In this circumstances the department will have to estimate the commission on the basis of material available with the department.
3.9.2.3 The seized accommodation bills indicates that the assessee has charged VAT @4% from the beneficiaries. The assessee has been unable to prove that the VAT charged on accommodation bills , have been refunded to the beneficiaries.
3.9.2.4 The assessee is using its tactics to route ns transactions through short duration firms so that trade tax department is unable to trace out the defaulters.
3.9.2.5 The assessee has not given any evidence regarding deposit of VAT charged on the accommodation entry bills with the trade tax departments. Therefore, it is be being held that the VAT charged on the accommodation entry bills has been retained by the assessee.
3.9.2.6 In view of the aforesaid facts and discussion the average rate of commission charge on the basis of annexure A-3 has been done which is reproduced as under:A B C D E F G H 1
27 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 P‟arty Ann Page Amount of Amount Percentage Date commission. Party Name Party Name No No No Received Paid % E-3 A-3 138 27.03.2010 37500 Ashna Overseas 2500000 Ashna Overseas 1.50 E-3 A-3-- -137 26.03.2010 6000- Jain-Metal-Ind- 400000 Jain-Metal-Ind ---------. ---- 1-50--
E-3 A-3 131 22.03.2010 6000 Jain Metal Ind 400000 Jain Metal Ind 1.50 E-3 A-3 131 22.03.2010 1600 Munna Plastic 41600 Munna Plastic 3.85 E-3 A-3 127 19.03.2010 460 Bhagwati Enterprises 23878 Bhagwati Enterprises 1.93 E-3 A-3 127 19.03.2010 6750 Ashna Overseas 450000 Ashna Overseas 1.50 E-3 A-3 127 19.03.2010 ‟ 9558 Bharat Barthan 637245 Bharat Barthan Bhandar 1.50 Bhandar E-3 A-3 127 19.03.2010 1969 Ashna Overseas 131250 Ashna Overseas 1.50 E-3 ' A-3 125 18.03.2010 3662 Jain Metal Ind 244080 Jain'Metal Ind 1.50- E-3 A-3 113 11.03.2010 13460 Global Overseas 1000000 Global Overseas 1.35 E A-3 113 11.03.2010 488 Victor Rubber 25578 Victor Rubber 1.91 E-3 A-3 113 11.03.2010 2880 Gautam Sales 149760 Gautam Sales 1.92 E-3 A-3 107 08.03.2010 22500 Ashna Overseas 1500000 Ashna Overseas 1.50 E-3 A-3 103 05.03.2010 2331 Victor Rubber 121214 Victor Rubber 1.92 E-3 A-3 101 04.03.2010 4847 Bharat Agencies 323134 Bharat Agencies 1.50 E-3 A-3 95 26.03.2010 15165 Ashna Overseas 1011000 Ashna Overseas 1.50 E-3 A-3 93 25.02.2010 1010 Laxmi Enterprises 52521 Laxmi Enterprises 1.92 E-3 A-3 83 19.02.2010 6000 Jain Metal Ind 400000 Jain Metal Ind 1.50 E-3 A-3 54 02.02.2010 13500 Bharat Agencies 900000 Bharat Agencies 1.50 E-3 A-3 52 01.02.2010 3130 Softline 208728 Softline 1.50 1 E-3 A-3 52 01.02.2010 13761 Capital Impex 1000000 Capital Impex 1.38 E-3 A-3 34 20.01.2010 4725 Ashna Overseas 315051 Ashna Overseas 1.50 E-3 A-3 27 16.01.2010 4500 Jain Metal Ind 300000 Jain Metal Ind 1.50 E-3 A-4 12 05.04.2010 3357 Sen Traders 223808 Sen Traders 1.50 E-3 A-4 12 05.04.2010 7952 Garg Traders 530145 Garg Traders 1.50 E 3 ' / A-4 12 05.04.2010 10001 Bharat Agencies 533450 Bharat Agencies 1.87 E/ A-4 12 05.04.2010 3357 Sen Traders 223808 Sen Traders 1.50 E-3 A-4 12 05.04.2010 7952 Garg Traders 530145 Garg Traders 1.50 E-3 ' A-4 , 12 05.04.2010 10001 Bharat Agencies 533450 Bharat Agencies 1.87 E-3 A-4 11 06.04.2010 7928 Jain Metal Ind 528242 Jain Metal Ind 1.50 28 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 E-3 A-4 9 08.04.2010 48478 Ashna Overseas 3231881 Ashna Overseas 1.50 E-3 A-4 4 865 Homex India Pvt ltd 57628 Homex India Pvt ltd 1.50 281687 18527596 T The' assessee has not maintained its books of accounts, and details of very limited period is available with the department. Since the assessee has been charging commission @ 1.5% to 3.85% and the average of commission charge on the basis of said documents commission to 1.52%. Therefore it is being held that the assessee has charged commission @ 2% on the total quantum of accommodation entries provided by the assessee.
3.9.2.7 It is also being held that besides commission the assessee has also retained 4%- VAT charged on the invoices, as the assessee has failed to give any evidence regarding refund of VAT to the ultimate-beneficiaries.
3.9.2.8 Thus the total income earned on the accommodation entries provided by the assessee would be calculated @ 6% of the total of accommodation entries provided during the respective years. In the F.Y. 2005-06 relevant to A.Y. 2006-07 the assessee has provided accommodation entries of Rs.1074085796/-. Profit on accommodation entries provided @ 6.% of Rs.104085796/- comes to Rs. 64445148/-
3.9.2.9 The assessee must have incurred some establishment expenses for earning of the said income therefore in absence of books of account it is being held that 0.5% of the profit may have been incurred for establishment expenses etc. which comes to Rs. 64445148/-
3.9.2.10 In view of the aforesaid discussion the profit from providing accommodation entries excluding the expenses for A.Y. 2006-07 comes to Rs. 59074710/- (Rs.64445148/-- Rs.5370428/- is added to the income of the assessee. Since, the assessee has concealed income and furnished inaccurate particulars of income, penalty u/s 271(l)(c.) is being initiated.
4. Vide show cause dated 12.03.2013 the assessee was required to explain as to how the investment in the under mentioned companies have been accounted for.
"It has been found that the following companies were incorporated by you i. Ansh Exmim Pvt. Ltd Ar/103 to 106 Assessment Year 2009-10 company floated in 2005 has allotted 187700 shares at Rs. 50 )10+40) premium totaling of Rs. 9388000/-.
ii. Myra Exim Pvt Ltd AR/103 to 106 Assessment Year 2009-10 Company floated in 2006 has allotted 10000 shares to Sh. Vaibhav Jain & Smt Meenashi and received share application money of Rs. 1515000/-.
iii. Myra Fashion Pvt Ltd AR/103 to 106 Assessment Year 2009-10 company registered in 2007.
Please submit the complete details of share holding of the aforesaid companies for the period i.e. FY 2004-05 to 2010-11, along with the details of capital introduced 29 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 in respective years. Please furnish the complete details about source of investment alongwith copy of bank statement and confirmations and copy of ITR's etc. Please furnish the present postal addresses of share applicants."
4.1 The assessee in his reply has submitted as under:
''As rightly stated by your goods elf the assessee it -as a Director and/or shareholder in the above named concerns/firms Regarding the investment by the assessee in these firms, it is submitted that the same was very nominal. It is submitted Sir, that a summary of the Balance sheet of each of the above Company is attached.
It is further submitted that, the Animal Financial statements (i.e., Audi ted Balance Sheet, PL A/c, etc.), JTR Computation of each of above concern/ company since inception/ incorporation, till assessment year 2011-12 is being attached.
Regarding the other detail of the Companies, as desired by your goodself, it is submitted that the same are beyond the scope / keen of Search assessment proceedings as held by the Mumbai ITAT Special Bench in case of All Cargo Global Login 'at vs. DC If (ITAT Mumbai Special Bench), ITA 5018/Mumbai/2010 dated 00.07.2012 Sir, it is submitted that it seems that your goodself while calling the copies of bank statements, bank books etc. of this company intends to make out an assessment of these companies, which it is submitted even at the cost of repetitions outside the scope of instant assessment proceedings u/s 153 A of the Act."
4.2 The submission of the assessee was duly considered and are not acceptable.
In this regard the assessee had filed the details of share capital invested vide letter dated 28.03.2013, without any confirmation or other supporting evidences. In this regard it is submitted that earlier a summon u/s 131 was issued form the investigation wing to Sh. Vinnet Arora a share holder in Ms/ Ans Exim Pvt. Ltd Sh. Vineet Arora in its letter dated 13.08.2010 has denied and submitted that he had never applied or paid any sum towards share application money in Ansh Exim Pvt. Ltd. He had stated in its letter dated --43.08.-20-KHhaba-sum of- Rs 13,00;000/-- was given premises Ansn Exim' Pvt; Ltd. for purchasing a plot at Kundli through a property dealer. However since the deal did not materialized therefore the money was received back. Considering the admission of the Sh. Vineet Arora and the fact that no details and confirmation in respect to other share applicant have been filed it is presume that Sh. Vaibhav jain has made investment in the name of himself his family members and other bogus names. The facts gets further support from the nature of activities in which Sh. Vaibhav Jain is involved, i.e. providing of accommodation entries through 37 paper entities to the extent of Rs.1000 crores. It is further notice the assessee deliberately delayed in submission of the returns of income, replies and confirmation etc. so as to ensure that the department does not get any opportunity to cross verify the information/investments.
4.3 In view of the aforesaid discussion and also keeping in view the fact that the assessee is constant offender of the law and is engaged in providing huge 30 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 accommodation entries through paper entities therefore it is being held that the share capital of Rs. 1,00,000/- made in Myra j Exim Pvt. Ltd., share application money of Rs. 2,50,000/- in Myra Exim Pvt. Ltd. and share application money of Rs. 1,05,45,000/- in M/s Ansh Exim Pvt. Ltd. during A.Y. 2007-08 is bogus investment made in the name of different bogus identities. The assessee has not furnished any confirmations in this regard. Thus Rs. 1,08,95,000/- is being added to the income of the assessee as unexplained investment made in M/s Myra Exim Pvt. Ltd., in the name of different bogus identities. Since, the assessee has concealed income and fumirshed inaccurate particulars of income, penalty u/s 271 (l)(c.) is being initiated.
5. Considering the above discussion, income of the assessee is computed as under:-
Income declared by the assessee Rs. 482642/-
Add:
1. Profit from accommodation entries as discussed in para 3 above Rs. 59074719/-
2. Addition on account of unexplained investment as discussed in Rs. 100000/-
Para 5 above
Net Taxable income Rs. 59657361/-
P/o Rs. 59657360/-"
17. The assessee aggrieved with the order of the ld AO preferred an appeal before the ld CIT (A) . The ld CIT(A) gives his finding after considering the submissions of the assessee in para No. 8 as under:-
"8. I have considered the facts of the case and the written submissions of the appellant. During the course of search & seizure operation the appellant admitted that he was engaged in the business / activities of providing accommodation entries by issuing bogus bills needy to parties by routing the entries through bank accounts of his own concern and also the bank accounts of the concerns operated in the names of other persons which were controlled by him. The appellant was using all these firms for the purpose of providing bogus sale bills for which he was earning commission. In the statement recorded u/s 131 of the IT Act, 1961 during the course of proceedings u/s 153A on 13.2.2013, the appellant in answer to question no. 2 conclusively readmitted his stand that he was engaged in the business / activity of providing accommodation entries by way of bogus purchase bills. The proprietors of the paper entities in their statement recorded during the search proceedings and pre search proceedings also admitted that they were petty employees of Sh. Vaibhav Jain drawing a meager salary of Rs.3,000/- to Rs.5000/- and the bank accounts opened in their respective names were on the pretext of depositing their salary. All the proprietors of the paper entities stated that the bank accounts and cheque books opened in their names were being used by Sh. Vaibhav Jain for giving accommodation entries without their knowledge. Further, Sh. Navneet Kumar Jain, father of the appellant, also admitted that his son Sh. Vaibhav Jain had a complete control over the 37 firms and the bank accounts in the names of the proprietors of the 37 paper entities, who were actually employees of the appellant, were being used for providing accommodation entries.
8.1 With regard to the appellant's contention that the intra transactions between the firms should not been included in the turnover, I find that the appellant failed to furnish any 31 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 documentary evidence to show that these intra transactions between the firms were not business transactions through which the accommodation entries were provided. Further, the appellant also failed to file any evidence that the VAT charged @4% from the beneficiaries on the accommodation bills was actually refunded to the beneficiaries or for that matter the same was deposited with the trade tax department. Therefore, the Assessing Officer has rightly observed that VAT charged on the accommodation bills was retained by the appellant.
8.2 I also find that the Assessing Officer on the basis of seized document marked as annexure A-3 incorporated a chart in the assessment order to show that the appellant was charging commission between 1.5% to 3.85%. On this basis, the Assessing Officer held that the appellant charged commission @2% on the total quantum of accommodation entries provided by him. Further, since the appellant did not prove that he either had refunded the VAT amount charged from the beneficiaries on the bogus bills to the beneficiaries or deposited the same with the trade tax department, the Assessing Officer also added 4% VAT charged from the beneficiaries on the bogus bills to the commission income of 2% and accordingly calculated the total income earned by the appellant by applying rate of 6% on the total accommodation entries provided by the appellant during the year under consideration and calculated the net profit at Rs.5,90,74,719/- after allowing expenses of 0.5% of the gross receipt of Rs.1,07,40,85,796/-. Here also I do not find any reason to interfere in the order of the Assessing Officer as the appellant did not furnish any material to controvert the findings of the Assessing Officer. Accordingly, considering the facts and circumstances of the case and also the instances of the rate of the commission cited by the Assessing Officer in the chart incorporated in the order, in my view a rate of 2% commission charged by the Assessing Officer is very reasonable. Further, the Assessing Officer was also justified in adding 4% VAT charged from the beneficiaries in the absence of any evidence to show that either the same was refunded back to the beneficiaries or deposited with the trade tax department.
8.3 However, on perusal of the assessment record, I find that the appellant, in his return of income filed for assessment year under consideration, had declared an income of Rs.5,82,642/- being the profit margin from the transactions of providing accommodation entries under the head income from other sources. The Assessing Officer, as discussed above, worked out the profit from providing accommodation entries, after excluding expenses, at Rs.5,90,74,719/. While making the impugned addition of Rs.5,90,74,719/- on account of profit from the accommodation entries, the Assessing Officer should have reduced the profit of Rs.5,82,642/- from providing accommodation entries which was already declared by the appellant in his return income. Hence, I agree with the submission of the appellant that income to extent of Rs.5,82,642/- has been taxed twice. Therefore, the addition to the extent of Rs.5,82,642/- out of total addition of Rs.5,90,74,719/- deserves to be deleted as the same tantamount to double addition. Accordingly, the appellant gets a relief of Rs.5,82,642/-."
18. Accordingly, he deleted the addition of Rs. 582642/- out of the total addition of Rs. 59074719/- and confirmed the balance addition.
19. On account of addition made of Rs. 1 lac for the investment in M/s.
Ansh Exim Pvt. Ltd on account on unexplained investment he confirmed holding as under:-
"9. Ground no. 3 relates to addition of Rs.1,00,000/- made by the Assessing Officer on account of unexplained investment in M/s Ansh Exim Pvt. Ltd.
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10. While making the impugned addition the Assessing Officer observed as under:
"4 Vide show cause dated 12.03.2013 the assessee was required to explain as to how the investment in the under mentioned companies have been accounted for.
"It has been found that the following companies were incorporated by you.
i) Ansh Exim Pvt. Ltd. AR/103 to 106- A.Y. 2009-10- Company floated in 2005 has allotted 1,87,700 shares at Rs. 50/- [10+40 (Pramia]] totaling to Rs. 93,85,000/-.
ii] Myra Exim Pvt Ltd. AR/103 to 106- A.Y. 2009-10- Company floated in 2006 has allotted 10,000 shares to Sh. Vaibhav Jain & Smt. Meenakshi Jain and received share application money ofRs. 15,15,000/-.
iii) Myra Fashion Pvt Ltd. AR/103 to 106 A.Y. 2009-10- Company registered in 2007.
Please submit the complete details of share holding of the aforesaid companies for the period i.e. F.Y. 2004-05 to 2010-11, alongwith the details of capital introduced in respective years. Please furnish the complete details about source of investment alongwith copy of bank statement and confirmations and copy of ITR's etc. Please furnish the present postal address of share applicants."
4.1 The assessee in his reply has submitted as under:
"As rightly stated by your goodself the assessee was a Director and/ or shareholder in the above named concerns/ firms Regarding the investment by the assessee in these firms, it is submitted that the same was very nominal. It is submitted Sir, that a summary of the Balance sheet of each of the above Company is attached.
It is further submitted that, the Annual Financial statements (i.e., Audited Balance Sheet, P/L A/c, etc.], ITR & Computation of each of above concern/ company since inception/ incorporation, till assessment year 2011-12 is being attached Regarding the other detail of the Companies, as desired by your goodself, it is submitted that the same are beyond the scope / keen of Search assessment proceedings as held by the Mumbai ITAT Special Bench in case of All Cargo Global Logistics Ltd vs. DCIT (ITAT Mumbai Special Bench), ITA 5018/Mumbai/2010 dated 06.07.2012 Sir, it is submitted that it seems that your goodself, while calling the copies of bank statements, bank books etc. of this company intends to make out an assessment of these companies, which it is submitted even at the cost of repetitions is outside the scope of instant assessment proceedings u/s 153A of the Act.".
4.2 The submissions of the assessee was duly considered and are not acceptable. In this regard the assessee had filed the details of share capital invested vide letter dated 28.03.2013, without any confirmation or other supporting evidences. In this regard it is submitted that earlier a summon u/s 131 was issued form the investigation wing to Sh. Vineet Arora a share holder in M/sAnsh Exim Pvt. Ltd. Sh. Vineet Arora in its letter dated 13.08.2010 has denied and submitted that he had never applied or paid any sum towards share application money in Ansh Exim Pvt. Ltd. He had stated in its letter dated 13.08.2010 that a sum of Rs. 13,00,000/- was given premises Ansh Exim Pvt Ltd. for purchasing a plot at Kundli through a property dealer. However since the deal did not materialized therefore the money was received back. Considering the admission of the Sh. Vineet Arora and the 33 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 fact that no details and confirmation in respect to other share applicant have been filed it is presume that Sh. Vaibhav jain has made investment in the name of himself his family members and other bogus names. The facts gets further support from the nature of activities in which Sh. Vaibhav Jain is involved, i.e. providing of accommodation entries through 37 paper entities to the extent of Rs.1000 crores. It is further notice the assessee delebratley delayed in submission of the returns of income, replies and confirmation etc. so as to ensure that the department does not get any opportunity to cross verify the information/investments.
4.3 In view of the aforesaid discussion and also keeping in view the fact that the assessee is constant offender of the law and is engaged in providing huge accommodation entries through paper entities therefore it is being held that the investment of Rs. 1,00,000/- made in Ansh Exim Pvt. Ltd. during AY. 2006-07 is bogus investment made in the name of different bogus identities. Thus Rs. 1,00,000/- is being added to the income of the assessee as unexplained investment made in M/sAnsh Exim Pvt. Ltd., in the name of different bogus identities."
In the course of assessment proceedings, the AR of the appellant filed the owing written submissions:
"AO has discussed the issue vide para 4 (Page 52] of the Assessment order. AO has made an addition of Rs. One lakh as unexplained investment in the share capital of Ansh Exim (P) Ltd. in the name of Bogus identities. It is submitted that list of shareholders of the company was submitted in the Assessmentproceedings. The Ld. AO without appreciating the fact that Assessee has offered income of Rs. 4.83 lakhs and further income by applying 0.76% rate of commission comes to Rs. 33.95 Lacs the investment of Rs. 1 Lakh is thus covered by the Income so offered as stated above."
12. I have considered the facts of the case and the written submissions of the appellant. The appellant did not give any satisfactory explanation either in the course of search proceedings, assessment proceedings or during the appeal proceedings before me with regard to investment made in the company M/s Ansh Exim Pvt. Ltd. during the year under consideration. Therefore, since the appellant did not controvert the findings of the Assessing Officer, I see no justification to interfere in the order of the Assessing Officer on this issue. Accordingly, the action of the Assessing Officer the making the impugned addition is upheld and the addition made is confirmed."
20. As we have already noted that despite notice of hearing to the assessee fixing the date of hearing on 02.01.2018 vide notice dated 14.11.2017, on 04.10.2017 vide notice dated 05.09.2017 and further vide notice dated 02.01.2018 fixing date of hearing for 09/04/2018, assessee preferred to not to appear and represent his case. Therefore, we do not have any option but to decide the case on its merits as per information available on record.
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21. The ld CIT DR submitted a written note for all the years stating the facts of the case and his arguments for respective additions for different years as under:-
"1. In the above appeal, the Revenue wishes to submit as under in addition to oral arguments which may be made at the time of hearing.
2. There was a search in the case of assessee on 26.04.2010, wherein an evidence of accommodation entry racket of issue of bogus sale bills to beneficiaries was found. The cheque received from beneficiaries was deposited in the account concern issuing bogus bills. It was then transferred to another concern from where the cash was withdrawn and returned to the beneficiaries. The assessee had opened several proprietorship concerns in his name, in the name of his father and several employees, related persons etc. The statements of assessee, his father and also the so called proprietors of various paper concerns were recorded before the search, during the search and after the search. At each stage the assessee and his father confirmed the above modus operandi. Assesee's father also confirmed that the work in his proprietorship concern was also done by the assessee. The employees confirmed that they were drawing meagre salary and had given their identification documents etc. to the assessee from which the assessee might have opened bank accounts and they were not aware of the same. The list of 37 firms is there on page 3 of the assessment order for A.Y. 2006-07.
3. The following statements have been reproduced in the order.
S No. Date Person
2 26.04.2010 Assessee - search
3 13.02.2013 Assessee - Post search
4 26.04.2010 Assessee's father, Sh. Navneet Kumar Jain
5 16.06.2010 Assessee's father, Sh. Navneet Kumar Jain
6 22.02.2013 Assessee's father, Sh. Navneet Kumar Jain
7 08.05.2009 Neha Sharma, sister of Renu Sharma, Neha Sharma is
shown as proprietor of Ess Mart Enterprises at Sr.No.33 on page 3 of the assessment order for A.Y. 2006- 07. Renu Sharma is proprietor of M/s Heer International and Shree Krishna International appearing at Sr. No. 16 & 17 on page 3 of the assessment order for A.Y. 2006-07.
8 06.05.2009 Girdhari Lai Puri 9 15.05.2009 Neha Sharma 10 08.05.2009 Renu Sharma 11 18.05.2009 Tarun Puri 12 18.05.2009 Girdhari Lai Puri 35 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 13 27.08.2009 Poonam Sharma
4. Since the activity of accommodation entries stood established even during pre search statements of the beneficiaries, proprietors of various concerns, assessee and his father, the only issue that remained was the determination to turnover of the business of giving accommodation entries and the corresponding commission. The AO has dealt with the issue from page 40 onwards. In his statement of 26.04.2010 (page 13 of assessment order for A.Y.2006-07) commission was stated to be from 0.5% to 1% and all the 37 concerns mentioned on page 3 of the order were started to be under the control and management of the assessee. The proprietors of these nnnrprns were nersons of meaere resources and ex-employees, employees, representation by the assessee. As discussed from page 40 onwards of the assessment order for A.Y. 2006-07, the assessee sought to disassociate himself from the concerns mentioned on page 3 of the assessment order excluding the concerns under his proprietorship and the proprietorship of his father/HUF . The figure of turnover was also disputed. The AO has summarised the assessee's submission on page 41 & 42 and has given his findings from page 42 onwards. As mentioned on page 43, the assessee accepted the total turnover of all the 37 concerns. Therefore, his contention that he had nothing to do with those concerns is without any basis. Moreover he had confirmed that all the concerns are under his control both in pre search enquiry and also at the time of search. After discussing various submissions of the assessee the AO computed the total turnover on page 47 of the assessment order for A.Y.2006-07 from F.Y. 2004-05 to 2010- 11 at Rs.980.47 crs. The year wise breakup was given in annexure to the assessment order. The issue of commission has been discussed from page 47 onwards in the assessment order. Vide the show cause notice dated 12.03.2013 (reference page 49 of the assessment order) the assessee was required to show cause on this issue. The assessee also claimed that VAT and Sale Tax of 4% was refunded to beneficiaries but no evidence of the same could be given as mentioned on page 50 of the assessment order. The AO worked out the commission on the basis of seized material which is given on page 51 of assessment order.
The average commission worked out to 1.52%. In this background the AO estimated the income at 6% (4% of VAT/Sale Tax + 2% commission). From the same expenditure 0.5% was allowed and the net addition of 5.5.% has been made.
5. The CIT(A)'s findings on this issue start from para 8 on page 15 of the order for A.Y. 2006-
07. The CIT(A) confirmed the addition of 4% of VAT/Sale Tax as the evidence of refund of same to beneficiaries or the deposit of the same with the tax authorities was not furnished. The addition of commission at 2%, less expenses of 5% was also confirmed. The findings are in para 8.2 of the order of CIT(A). submissions should be taken as common submissions for all the years from A.Y.2006-07 to A.Y. 2011-12.
7. Apart from above addition, there are also additions for undisclosed investments in all the above years. The appeal No. wise submission in respect of the said additions is being made here as under:
1. ITA NO.3770/D/2014 - A.Y. 2006-07 Ground No.3 In respect of ground No.3 the AO has dealt with the issue from para 4 onwards while the CIT(A) has dealt with it in para 12. The issue involved pertains to the addition for share capital of one of the paper companies through which the assessee gave accommodation entries. The summon u/s 131 to one of the shareholders resulted in denial of application 36 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 for shares. The corresponding reference is in para 4.2 of the assessment order and on page 18 of the order of CIT(A). Since the issue of accommodation entry through paper companies stand established and the assessee failed to establish the source of share application in the said company the addition of the same is justified. The Revenue also relies on the decision of the Apex Court in the case of Mukundray K Shah reported in 290 ITR 433 as the corresponding addition is consequent to an enquiry related to the evidence found during the search. The Revenue also relies on the decision of the Apex Court in the following two cases on merits of the case.
1. Rick Lunsford Trade & Investment Ltd. v CIT 216-TIOL-207-SC-17
2. [2015] Navodaya Castle P.Ltd. v CIT Tavrnflnn mm 1
2. ITA No.3771, 3772 & 3775/D/2014 - A.Y. 2007-08, 2008-09 & 2011-12 Ground No.3 The facts are similar to ITA No.3770/D/2014. The corresponding reference in assessment order from page-4 onwards and in para 12 of the order of CIT(A).
3. ITA NO.3773/D/2014 - A.Y. 2009-10 Ground No.3 The AO has dealt with the issue from para 4 onwards. The addition is based on seized documents regarding unaccounted payment for land transaction. The AO made an addition for the entire amount mentioned in respect of the said land in seized documents.
The CIT(A) hfas confirmed part of the addition. The corresponding appeal of the Revenue is ITA No.3681/D/2014 which is fixed on 11.04.2018. The Revenue relies on the order of the AO and the arguments which shall be made in appeal NO.3681/D/2014.
4. ITA No.3774/D/2014 - A.Y. 2010-11 Ground No.3, 4, & 5 All these additions are related to land transaction, the evidence which was found in the seized documents. The AO has discussed the same from para 4 onwards. The corresponding decision of the AO in respect of these grounds is on page 55, 63 85 65. The corresponding reference to the CIT(A) is from page 17 onwards and is findings are in para 12 and 15. The seized documents have a detailed record of land transactions which were found as being related to accommodation entries in some cases but could not establish the same as the amount did not telly with the amount of accommodation entries gives. The Revenue relies the order of the AO and CIT(A)."
22. We have carefully considered the contentions of the ld CIT DR as well as the arguments raised by the assessee before the lower authorities and the orders of the lower authorities dealing with the above additions. Undisputedly, assessee is engaged in the providing accommodation entries for issuing bogus bills to beneficiaries through several entities in the name of different persons. It was found that during the financial year 2005-06, assessee has provided bogus bills of Rs. 1074085796/- to various beneficiaries and the 6% commission ( which includes 2 % commission on bogus billing and 4 % sum of VAT on it which is 37 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 collected by assessee but not paid to Govt) has been determined by the ld Assessing Officer as his income and further, the ld Assessing Officer allowed 0.5% towards the expenditure incurred by the assessee. Therefore, the ld Assessing Officer computed the income of the assessee of Rs. 64445148/- and granted expenditure deduction of Rs. 5370429/- and computed the net income at Rs. 59074719/-. While adding the sum the ld Assessing Officer has not granted the assessee the relief of Rs. 582642/- as income offered by the assessee. The ld CIT (A) reduced the addition by the above sum. During the course of assessment, proceedings the assessee was examined who repeatedly confirmed about the business. Further, some of the persons who were used as the benami of the assessee were also examined and they confirmed that they do not know anything about the accommodation entries provided by the assessee. As the case of the revenue conclusively proves which is confessed by assessee and his father in various statements as well as statements of the other persons that assessee is providing bogus bills to beneficiaries, it is correctly held that commission income is chargeable to tax in the hands of the assessee. The only dispute is with respect to rates of commission charges. It is apparent that assessee is found to be engaged in issuing bogus bills to various parties. This shows that assessee is providing various bills of purchase of material and services to various beneficiaries by charging VAT there on @ 4 % to give it semblance of reality/ genuineness. Beneficiaries claimed these expenses as deduction while computing their income and also claimed VAT as set off while filing their income tax and VAT returns. Beneficiaries in turn paid cash to the assessee over and above the Bill + VAT amount his commission too. According to seized documents, the assessee is found charging commission income from 1.50 % to 3.85 %. The seized documents indicating commission rates are for a limited period. Therefore, it is apparent that assessee has minimum commission rates of 1.50% and also maximum amount of Commission is 3.85%. Rates of commission also varies as per the period in which the bogus 38 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 bills are required. Rates are generally higher in the last months of closing of the year. In view of this fact we do not find any infirmity in the order of the ld CIT(A) in confirming the addition of Rs. 58492077/- adopting rates of commission @ 2% and VAT @ 4 % totaling to 6 % . Further, the assessee has not shown any payment of VAT charged by him from the parties to whom the accommodation entries were provided, therefore the sum of 4 % VAT along with the commission of 2 % is chargeable to tax as income of the assessee. It is apparent that if assessee provides the bogus bill of Rs. 100/- then assessee charges 4% VAT thereon and receives the consideration of Rs. 104/-. The assessee is required to pay Rs. 4 to the state govt towards the VAT collected by him. During the course of search, no such evidences were found where the assessee has paid VAT to the state govt and no evidences have been produced during the assessment proceedings. Therefore, we find no infirmity in the order of the lower authorities in not allowing the credit for VAT. To justify the addition of commission income for accommodation entry @6% the ld Assessing Officer and ld CIT (A) has correctly assumed the rate of 2% commission for providing bogus purchase bills and 4% for the VAT. In view of this we reject the ground of the assessee for granting deduction of VAT from his income. We also find no reason to reduce the commission income from 2%. With respect to the claim of the assessee that there is an expenditure also involved in these business and therefore, the commission income is required to be computed only at 0.76% also deserves to be rejected. The assessee has not shown any proof of such expenditure and no such proof were found in search proceedings. It was also not shown that what kind of expenditure assessee was incurring and to whom he was paying such expenditure. In view of this we confirm the order of the ld CIT(A) in confirming the addition of Rs. 58492077/- on account of commission income on providing accommodation entries. In view of this, we reject ground No. 2 of the appeal of the assessee.
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23. Ground No. 3 of the appeal of the assessee is regarding addition of Rs.
1 lac as unexplained investment in the various entities operated by the assessee. We also do not find any reason to disagree with the order of the lower authorities and the order of the ld CIT(A) where the reasons given were adequate to confirm this addition. in the result ground No. 3 of the appeal of the assessee is dismissed.
24. Ground No. 1 is general in nature and therefore, same is dismissed.
25. In the result ITA No. 3770/Del/2014 for AY 2006-07 of the assessee is dismissed.
ITA No. 3771/Del/2301426. In ITA No. 3771/Del/23014 for Assessment Year 2007-08 ha similar grounds of appeal which are dealt with as under.
27. Ground No. 1 is general in nature and therefore same is dismissed.
28. Ground No. 2 is with respect to the confirmation of the addition of Rs.
186766002/- on account of commission from accommodation entries. For the reasons given by us in Assessment Year 2006-07 we confirm the order of the ld CIT(A).
29. With respect to Ground No. 3 of addition of Rs. 10895000/- on account of unexplained investment in various firms and entities owned by the assessee, we confirm the order of the ld CIT(A) for the reasons given by us in ground No. 3 for AY 2006-07.
30. In ITA No. 3772/Del/2014 for Assessment Year 2008-09 the assessee has challenged the addition of Rs. 136924494/- on account of commission income. We confirm the finding of the ld CIT(A) for reasons given by us in appeal of the assessee for Assessment Year 2006-07 in ground No. 2 of that year. Therefore, ground No. 2 of the appeal is dismissed.
31. Ground No. 3 of the appeal is with respect to addition on account of unexplained investment in various concerns of Rs. 3367000/-. For the reason given by us in assessee appeal for Assessment Year 2006-07 in ground no. 3 we dismiss this ground of appeal.
32. In the result the appeal of the assessee for AY 2008-09 is dismissed.
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33. In ITA No. 3773/Del/2014 for Assessment Year 2009-10 vide ground No. 2 assessee has challenged the confirmation of the addition of Rs. 74027392/- on account of commission from accommodation entries. For reasons given by us in appeal of the assessee for Assessment Year 2006-07 we confirm the finding of the ld CIT(A) in confirming the above addition. Therefore, ground No. 2 of the appeal is dismissed.
34. Ground No. 3 of the appeal is with respect to addition on account of unexplained investment in various concerns of Rs. 7300200/-. For the reason given by us in assessee appeal for Assessment Year 2006-07 in ground no. 3 we dismiss this ground of appeal.
35. Ground No. 1 is general in nature and therefore, same is dismissed.
36. In the result appeal of the assessee is dismissed.
37. In ITA No. 3774/Del/2014 for Assessment Year 2010-11 vide ground No. 2 assessee has challenged the confirmation of the addition of Rs. 45280273/- on account of commission from accommodation entries. For reasons given by us in appeal of the assessee for Assessment Year 2006-07 we confirm the finding of the ld CIT(A) in confirming the above addition. Therefore, ground No. 2 of the appeal is dismissed.
38. Ground No. 3 of the appeal is with respect to addition on account of unexplained investment in various concerns of Rs. 5456000/-. For the reason given by us in assessee appeal for Assessment Year 2006-07 in ground no. 3 we dismiss this ground of appeal.
39. Ground No. 1 is general in nature and therefore, same is dismissed.
40. Ground No. 4 the assessee challenged the addition of Rs. 4860000/- on account of unexplained investment in the immovable properties and further investment of Rs. 3771000/- on account of unexplained investment in the properties.
41. The brief facts of the case shows that various seized documents were found during the course of search. In seized documents E-3/A-3, 9, 70 & 77 shows the cash payment receipt Rs. 5654000/- against sale of property No. 298, Manesar, Gurgaon. The assessee tried to explain the above document stating that it is difficult for him to explain this paper.
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He submitted that beneficiary party Sunbeam Hitech Medicare was coded by the assessee and from that party Rs. 565400/- was received on account of accommodation entry. The ld Assessing Officer after examining the page NO. 9, 70 and 77 which are dated made the addition of Rs. 5456000/-. The ld Assessing Officer stated that the seized documents clearly indicate that assessee has made an investment in Plot No. 298 at Manesar, Gurgaon.
42. Further, with respect to page No. 101, 103, 105 and 107 the ld Assessing Officer noted that payment of Rs. 48.60 lacs have been shown in March 2010 and assessee has coded M/s. Durga Engineering Works for plot No. A-34, Rohtak Road, Anand Parvat Project as the seized document showed the cash payment of Rs. 48.60 lacs the ld Assessing Officer made the addition in the hands of the assessee as unexplained investment in immovable property.
43. The ld Assessing Officer further noted that one paper was found in the name of M/s. Ansh Impex where the transaction for property at Dhir Khera. According to that it is apparent that assessee purchased land admeasuring 2160 sq yards at Rs. 1160 per sq yards for Rs. 2505600/-. The assessee further incurred expenditure of Rs. 895603/-. The assessee paid Rs. 37.71 lacs including cash payment of Rs. 35 lacs and made the addition of Rs. 3771000/- on account of unexplained investment in the property.
44. The ld CIT(A) confirmed the addition of Rs. 48.60 lacs and Rs. 37.71 lacs holding that the assessee did not file any submission to support this ground hence, he upheld the finding of the ld Assessing Officer.
45. The ld CIT DR also supported the order of the lower authorities.
46. We have carefully considered contentions and perused the orders of the lower authorities. The seized papers during the course of search which are incorporated by the ld Assessing Officer in his assessment order clearly shows about the investment made by the assessee in the immovable properties. In view of this we do not find any reason to interfere in the order of the lower authorities and confirm the order of 42 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 the ld CIT(A) in confirming the addition of Rs. 4860000/- and Rs. 3771000/- on account of unexplained investment in immovable properties by the assessee. In the result ground No. 4 and 5 of the appeal of the assessee is dismissed.
47. In the result, appeal of the assessee for Assessment Year 2010-11 is dismissed.
48. In ITA No. 3775/Del/2014 for the Assessment Year 2011-12 vide ground No. 2 assessee has challenged the confirmation of the addition of Rs. 7342022/- on account of commission from accommodation entries. For reasons given by us in appeal of the assessee for Assessment Year 2006-07 we confirm the finding of the ld CIT(A) in confirming the above addition. Therefore, ground No. 2 of the appeal is dismissed.
49. Ground No. 3 of the appeal is with respect to addition on account of unexplained investment in various concerns of Rs. 240000/-. For the reason given by us in assessee appeal for Assessment Year 2006-07 in ground no. 3 we dismiss this ground of appeal.
50. Ground No. 1 is general in nature and therefore, same is dismissed.
51. In the result, appeal of the assessee is dismissed.
52. In the end before parting, we note that the ld Assessing Officer should not have stopped merely at making the addition in the hands of the assessee but should have alerted this scam to various authorities. Because looking to the magnitude of the fraud, it is impossible that it can be carried out if the bankers, VAT authorities, Income Tax Officers and Auditors of those entities have exercised due care in the performance of their duties. There are several bank accounts opened which were operated by the assessee and in all those bank accounts have huge transactions carried out without any substance for a fairly long period. Certain transactions in the names of persons are also carried out as alleged by putting fake signatures. Still the cheques have been passed for transfer of money. Even a layman could have visualized looking at the operation of the bank accounts that these transactions are suspicious, fraudulent and does not relate to any 43 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 business, but surprisingly bankers have failed to notice it. The VAT authorities could not also notice that bogus billing issued by the assessee of such a huge magnitude where the crores of Rupees of VAT is collected and not paid to the govt but set off is given to the beneficiaries who got the VAT benefit of the sum paid to an accommodation entry provider as well as the benefit of deduction of such expenses. There are several concerns, which are filing the return of income with the Income tax department for several years, showing huge turnover in their books, and showing miniscule profit. Such returns at least for the six years for almost 50 concerns were before Income tax Department, Tax officers might also have assessed some of them after scrutiny, but they also did not show any red flags to those returns. If those returns are not picked up for scrutiny then we do not have any doubt that such process of selection of scrutiny is faulty or the assessment made of those entity on scrutiny is merely an eyewash. It is also interesting to note that in the search operation itself the names of the real beneficiaries have also come out showing the bills etc and further some other accommodation entry providers names also given. Further this assessee is operating 37 concerns wherein, all these 37 + concerns have their bank accounts in ABN Amro Bank, Karur Vaishya Bank and many other banks. The modus operandi shows that the cheques received against the bogus bills issued by these parties were deposited in the bank account of these parties. Therefore, the revenue can reach from the instruments of payment to the real beneficiaries of these accommodation entries. Furthermore, from the bank account of these parties the cheques are issued by these bogus entities to the third parties. Therefore, from such cheques issued by these bogus entities the revenue can reach to the other conduit persons in whose bank account the money ultimately travelled before its withdrawal in cash. Therefore, it is not merely these 37 concerns only but many more parties and entities from whose bank accounts the money are withdrawn. It may also be possible that bank balances on that bank account are not 44 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 converted into cash by withdrawal but may also further be used by the assessee and his group of accommodation entry providers by further providing accommodation entries to the other parties. It may also happen that cash is never paid to the parties to whom the bogus bills are issued by the mode of withdrawal of cash from those bank accounts. It may also be possible that the bank balance generated in the other parties account are used for further providing accommodation entries who need the share capital, bogus loans and other credits. The revenue has made only part enquiry and unearthed the bogus billing scam of Rs. 650 to 700 crores on search on this assessee. However, if the enquiry is further conducted then it may possibly also show another scam of converting „black money‟ into so called „white money‟.
53. Further, the various state governments have also lost the huge sum of 4% VAT collected by this assessee on total bogus billing of Rs. 700 crores which amounts to not less than Rs.28 crores for which credit might already have been given by the respective VAT authorities of the various govts to the persons who are beneficiary of this bogus billing. We also direct the ld Assessing Officer to provide the information of the bogus entities floated by the assessee to the respective VAT authorities.
54. It is also to note there are 38 entities operated by the assessee and who were filing their return of income. The ld AO should have examined about the auditors of those company who conducted audits u/s 44AB of the Act because these are the bogus transactions which have been certified as „true and correct‟ for fairly long time. It is surprising what kind of audit methodologies would have been applied by the auditors for „ Audit Evidences‟ , „External Confirmations‟ , „written representations‟, „ Audit of quantity details‟ and „understanding of Business of the assessee‟ of all those entities which are bogus and without any substances. Little care and diligence by the auditor would have shown the real nature of those operations. It is apparent that those auditors have given a complete go bye to all the auditing 45 | P a g e Vaibhav Jain V ACIT ITA No 3770 to 3775/Del/2014 A Y 2006-07 to 2011-12 standards issued by ICAI which are in fact mandatory and should have been followed by them while auditing those entities.
55. It is also painful to note that all the concerns controlled by the assessee have used the banking route to evade the tax by issuing bogus bills and receiving cheques against those bills. The persons who are stated to be the owner of these entities are merely name lenders. The bankers have operated the bank account of these parties where Rs. 700 crores are credited and sent to another bank. Such transaction can be carried out only if the bankers of those parties are not vigilant and there is no surveillance on these accounts. Otherwise, it is impossible to believe that persons with no means have turnover of crores of Rupees in their bank accounts. The ld Assessing Officer should have also examined the bankers about the KYC norms in these accounts and the higher ups of the banking should have been alerted to report it to respective department.
56. In the result, we dismiss the appeals of the assessee in ITA No. 3770 to 3775/Del/2014 for Assessment Year 2006-07 to 2011-12. Order pronounced in the open court on 11/04/2018.
-Sd/- -Sd/-
(AMIT SHUKLA) (PRASHANT MAHARISHI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 11/04/2018
A K Keot
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
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